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In addition to this arrest, South Korea’s National Tax Service had also opened a separate investigation into the possible tax evasion at Bithumb and its affiliates.
On Thursday, February 2, Kang Jong-Hyun, the former chairman of South Korea-based crypto exchange Bithumb was arrested on charges of embezzlement, fraudulent illegal transactions, and breach of trust. The development comes a week after South Korean authorities requested the arrest of Bithumb owners.
Arrest of Former Bithumb Chairman
Along with Jong-Hyun, the South Korean authorities also requested the arrest of two other Bithumb executives that involved his younger sister Kang Ji-Yeon.
Last week, lock news publication Yonhap News reported that South Korean police officials raided the offices of Bithum as part of the investigation into the price manipulation of a coin listed on the Bithumb exchange. However, the coin involved hasn’t been identified.
Reportedly, South Korea’s National Tax Service had also opened a separate investigation into the possible tax evasion at Bithumb and its affiliates. However, this recent investigation of Kang and other executives is separate from the tax evasion investigation. The recent arrest basically centers around allegations that Kang and others stole Bithumb’s money and conspired to manipulate the company’s stock price.
Bithumb is one of those crypto exchanges that managed to sail through the 2021 crackdown by the South Korean authorities wherein 70 domestic exchanges closed.
Tough Time for Bithumb
The past few months have been pretty tough for crypto exchange Bithumb. Earlier last month on January 3, former Bithumb Chairman Lee Jung-Hoon was acquitted on charges of committing a $100 million fraud connected to the crypto exchange.
During the month of December 2022, Park Mo – the largest shareholder of crypto exchange Bithumb – was found dead outside his home in South Korea. This happened after he was named as a suspect in the prosecutor’s investigation into alleged stock manipulation and embezzlement. As per the local media, Park Mo took his own life.
The South Korean regulators have tightened scrutiny over crypto firms operating in the country over the last year. The regulators’ involvement in the crypto space has shot up ever since the collapse of the Terra ecosystem back in May 2022. At one point there were also talks that the FTX derivatives platform was looking to acquire Bithumb. However, later in 2022, the FTX exchange itself collapse as reports about the misuse of customers’ funds emerged.